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Cabela's Q1 comparable store sales decline
05 May '10
5 min read
During the quarter, World's Foremost Bank received from the Federal Deposit Insurance Corporation ("FDIC") a preliminary report related to a compliance examination conducted in the second quarter of 2009. This examination report expressed concerns that World's Foremost Bank improperly assessed various overlimit fees, penalty interest rates and late fees over the past six years, and also used an improper collection practice. The Company is currently in discussions with the FDIC to resolve these matters. In the event that the Company is unable to resolve any of the issues raised in the preliminary examination report, the Company estimates that its maximum financial liability is $12 million after-tax and has reserved that full amount as a special charge in its first quarter 2010 financial statements. The Company eliminated or modified all of the practices of concern to the FDIC during the second half of 2009. The first quarter 2010 results include the impact of this $12 million after-tax special charge.
For the quarter, excluding the $12 million after-tax special charge, net income increased 122% to $20.0 million, or $0.29 per diluted share. This compares to net income of $9.0 million, or $0.13 per diluted share, in the first quarter of 2009, which excludes $3.9 million of special charges related to impairments and the valuation of interest only strips. A detailed reconciliation is provided at the end of this release.
For the quarter, managed financial services revenue as a percent of managed credit card loans improved 380 basis points due primarily to increased interest and fee income, lower provision for loan losses and lower interest expense. For the quarter, charge-offs were 4.96% compared to 4.72% in the first quarter of 2009. This is the lowest quarterly increase in net charge-offs in the past two years and the lowest absolute charge off rate in the past three quarters. As a result of continued favorable charge-off trends and a more favorable outlook for charge-offs for the remainder of the year, provision for loan losses for the quarter was $15.1 million.
As of April 3, 2010, inventories totaled $446 million, a decrease of 22% compared to inventories of $574 million as of March 28, 2009. Total debt as of April 3, 2010, was $351 million compared to $475 million as of March 28, 2009, a decrease of $124 million or 26%.
"We are pleased with our continued progress controlling costs, driving operational excellence, strengthening our balance sheet and increasing Cabela's brand loyalty through the operations of World's Foremost Bank," Millner said. "Given our strong first quarter results, we expect earnings per share for 2010 to meet or exceed current expectations, even after absorbing the special charge taken in the first quarter. Additionally, given continued favorable trends related to charge-offs, we now expect average net charge-offs at World's Foremost Bank to be between 5.25 and 5.75% for 2010 as compared to our previous guidance of 5.75 to 6.25%."
For the quarter, excluding the $12 million after-tax special charge, net income increased 122% to $20.0 million, or $0.29 per diluted share. This compares to net income of $9.0 million, or $0.13 per diluted share, in the first quarter of 2009, which excludes $3.9 million of special charges related to impairments and the valuation of interest only strips. A detailed reconciliation is provided at the end of this release.
For the quarter, managed financial services revenue as a percent of managed credit card loans improved 380 basis points due primarily to increased interest and fee income, lower provision for loan losses and lower interest expense. For the quarter, charge-offs were 4.96% compared to 4.72% in the first quarter of 2009. This is the lowest quarterly increase in net charge-offs in the past two years and the lowest absolute charge off rate in the past three quarters. As a result of continued favorable charge-off trends and a more favorable outlook for charge-offs for the remainder of the year, provision for loan losses for the quarter was $15.1 million.
As of April 3, 2010, inventories totaled $446 million, a decrease of 22% compared to inventories of $574 million as of March 28, 2009. Total debt as of April 3, 2010, was $351 million compared to $475 million as of March 28, 2009, a decrease of $124 million or 26%.
"We are pleased with our continued progress controlling costs, driving operational excellence, strengthening our balance sheet and increasing Cabela's brand loyalty through the operations of World's Foremost Bank," Millner said. "Given our strong first quarter results, we expect earnings per share for 2010 to meet or exceed current expectations, even after absorbing the special charge taken in the first quarter. Additionally, given continued favorable trends related to charge-offs, we now expect average net charge-offs at World's Foremost Bank to be between 5.25 and 5.75% for 2010 as compared to our previous guidance of 5.75 to 6.25%."
Cabela's Incorporated
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